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Nu-Oil and Gas said it would defend a claim lodged by a joint venture partner in Canada that is pursuing the costs of well work.
The company's subsidiary Enegi had been working on production lease being developed with partner PVF Energy Services.
PVF had submitted a statement of claim to the Supreme Court of Newfoundland and Labrador General Division against Enegi for costs incurred carrying out the work programme, claimed to be around C$1.1m.
Nu-Oil and Gas said the production sharing agreement 'clearly states' that PVF would carry out the work programme 'at its sole cost, risk and perils' and that costs were reimbursable out of production from a well, and not by Enegi.
'The directors therefore believe that there is no merit in the claim,' Nu-Oil and Gas said.
'Further, the PSA provides for a clear process for the resolution of any dispute or claim arising out of the agreement.'
'PVF has not followed the prescribed process.'
'The company has taken initial legal advice and is considering its options, one of which is, on this basis, to challenge the jurisdiction of the court in this matter.'
'The company does not believe that defending the claim, against its subsidiary, will have any significant impact on its future activities.'